Reciprocity - 1860–1922

After 1860 the United States moved into a period of increasingly high
tariffs. At the same time, the American economy became much more
diversified, encompassing both commercial agriculture and industry.
Various groups within these sectors disagreed on market priorities and the
need for a protective tariff. This conflict carried over into political
debates and made the tariff one of the primary political issues of the
period. For the most part, the Republican Party supported high tariffs and
the Democratic Party campaigned for reduction. Both, however, reflected
the diverse nature of the economy and the concomitant effect on tariff
views. As a result, most tariff acts were complicated bundles of regional,
group, and political demands. Some free trade sentiment continued. In
Free Land and Free Trade
(1880), Samuel S. Cox argued that "under its benignant influence,
the enmities, wars and brutalities of men will yield to concordant
reciprocity." The physiocratic ideal had slipped on the American
value scale, however, and the dominant protectionist group stressed
national independence based on the home market. They agreed that world
peace and internationalism were fine aspirations, but decidedly
unrealistic in a world of nation-states. The reductionists wanted low
tariffs but not free trade. Another group emerging in the 1870s stressed a
limited form of reciprocity as a compromise between absolute protectionism
and reduction, thus reflecting a combined interest in some home market
protection and a vigorous push for foreign markets.

Internationally, protectionism surged during the late 1870s and 1880s.
Ironically, American economic strength contributed to this reversal. The
Bismarck tariff of 1879 reflected the desertion of free trade by the
German agrarian conservatives in the face of American competition. The
protective push was renewed after 1902, except for Britain.

Reciprocity underwent changes after 1860 in response to new priorities and
interests. A rigidly exclusive version of reciprocity was utilized.
American officials sought preferential agreements and special privileges,
especially concerning customs duties. As a symbol of this trend, the
nonexclusive Canadian Reciprocity Treaty was abrogated in 1866.

Reciprocity was also used to secure political advantages for the United
States as part of exclusive economic arrangements. The first political use
of reciprocity came in 1875 with the Hawaiian Reciprocity Treaty. The
Hawaiians gave the United States special economic privileges that were
denied to other nations, and in return Hawaiian sugar was given
preferential treatment in the United States market. In addition, the
Hawaiian government agreed not to make any territorial grants or to lease
ports to other powers. The British protested that this treaty violated
their most-favored-nation agreement with Hawaii, but the United States
replied that this was a "special and extraordinary" case
arising from "geographical and political reasons." This was
the beginning of a limited United States imperial preference system that
after 1900 was extended to Cuba, Puerto Rico, and the Philippine islands
(the latter two by act of Congress). When the renewed treaty was ratified
in 1887, the United States received exclusive rights to the use of Pearl
Harbor. The Cuban Reciprocity Treaty of 1902 had been promised by
Secretary of War Elihu Root to the members of the Cuban Constitutional
Convention in order to secure their acceptance of the Platt Amendment. The
treaty provided more privileges for Cuba in the American market than the
United States received in Cuba. However, American officials believed the
treaty would ensure Cuban prosperity and the strengthening of American
influence by peaceful means.

During the 1870s the administration of Rutherford B. Hayes considered
other reciprocity treaties, but only the Hawaiian treaty reached
completion. In the early 1880s, Secretary of State James G. Blaine became
a vigorous proponent of reciprocity as a means of opening markets,
especially in Latin America, and broadening the domestic support of the
Republican Party. Blaine initiated talks with Mexico, which were completed
in 1882 by his successor, Frederick T. Frelinghuysen. The latter, with the
support of President Chester A. Arthur, also started negotiations with the
Dominican Republic, Spain (for Cuba and Puerto Rico), El Salvador,
Colombia, and Great Britain (for the West Indies). Treaties were
negotiated with the first two in 1884, and both emphasized tariff
reductions or eliminations for American manufactured goods. The Mexican
treaty also gave the United States a privileged concession by eliminating
Mexican interstate taxes on American goods.

Rigid protectionists stalled consideration on these treaties. The Senate
approved the Mexican treaty but added a proviso calling for enabling
legislation by the House. This was not given, and the treaty lapsed.
President Grover Cleveland withdrew the Spanish and Dominican treaties,
and ended the other negotiations.

Blaine returned to the State Department and the reciprocity struggle in
1889. One of his first efforts was to push for a customs union at the
Conference of American States (1889–1890). The Latin American
states did not approve such a bold and exclusionary move, but they did
recommend the negotiation of individual reciprocity treaties.

Blaine then began a campaign to have reciprocity bargaining powers
included in the tariff bill being drafted by Congress. After much
maneuvering, Congress finally included in the McKinley Tariff of 1890 a
provision for a very restricted penalty method of bargaining. Sugar,
molasses, coffee, tea, and hides (the "tropical list") were
placed on the free list. The president was given the power to restore
these items to the dutiable list for any country that had duties on
American products that "he may deem to be reciprocally unjust or
unreasonable." In addition, the president was given the power to
negotiate reciprocity treaties with countries to bind the specified items
on the free list. These did not require Senate approval. In 1891 and 1892
the United States concluded such agreements with ten countries. Eight
treaties concerned the Western Hemisphere, and seven of these involved
nations or possessions in the Caribbean and Central America. Penalty
duties were imposed on three Western Hemisphere nations when they refused
to make concessions.

The Wilson-Gorman Tariff of 1894 did not include bargaining provisions and
undermined the agreements by reimposing the duty on sugar. Subsequently,
the Republican Party, with some internal dissent, adopted reciprocity as a
compromise position designed to secure the principle of protective tariffs
yet give some consideration to groups arguing that the country had to
build up foreign trade. "Protection and Reciprocity are twin
measures of Republican policy and go hand in hand," the platform of
1896 declared. William McKinley became president in 1897 and immediately
pressed Congress for a new tariff act that would ease the protective
system and modify the policy of exclusive reciprocity.

The Dingley Tariff of 1897 increased duties but provided for three types
of reciprocity treaties. The first was a limited version of the 1890
penalty-bargaining section. The new tropical list of free items consisted
of coffee, tea, tonka beans, and vanilla beans. The only treaty of any
consequence negotiated under this section was a reciprocity agreement with
Brazil in 1904. Brazilian coffee remained on the free list (more than 50
percent of the crop), and the Brazilian government gave a 20 percent
reduction on many American products.

The second and third types of reciprocity bargaining reflected the
administration's growing concern over trade with Europe and the
retaliatory measures enacted by countries such as France. These sections
of the tariff act provided for concessionary bargaining. The second type
authorized the president to negotiate agreements with countries exporting
argol (crude tartar used in winemaking), brandy, champagne, all other
sparkling wines, vermouth, paintings, and statuary. If "reciprocal
and equivalent concessions" were given to American goods, the
president was empowered to grant specified lower duties. The McKinley
administration concluded four of these "argol agreements,"
and the administration of Theodore Roosevelt signed nine more. None of
these had any significant effect.

The third type of bargaining provision marked an important modification in
the system of exclusive reciprocity and had some potential for trade
liberalization. It authorized the president to negotiate reciprocity
treaties that could lower duties up to 20 percent on all goods. He also
could negotiate the transfer to the free list of goods not produced in the
United States. However, such treaties would have to be approved by both
houses of Congress and would have five-year limitations.

President McKinley had appointed a reciprocity commission in 1897, under
the leadership of John Kasson. This commission negotiated the treaties
authorized by the tariff act, and thirteen of these (called the Kasson
treaties) were under the provisions of the third section of the act. The
treaty with France was the most significant, since it shifted most
American products to the minimum schedule. However, the protectionists in
Congress would not accept the Kasson treaties, realizing that the
executive branch was proposing an important step toward open reciprocity
concerning customs duties. In 1901, McKinley took the reciprocity fight to
the public. In his last speech, at Buffalo, New York, a few hours before
his assassination, he declared: "The period of exclusiveness is
past. The expansion of our trade and commerce is the pressing
problem…. Reci procity treaties are in harmony with the spirit of
the times; measures of retaliation are not."

McKinley's death took much of the drive out of the reciprocity
movement. The National Reciprocity Convention was held in November 1901,
under the auspices of the National Association of Manufactures, and the
National Reciprocity League was organized in 1902. Neither had any effect
on congressional protectionists, and the executive branch under Theodore
Roosevelt did not press the issue. As a result, the treaties failed, but a
pattern had developed that still characterizes the reciprocity struggle.
Leadership for trade liberalization through reciprocity would come from
the executive branch and would encounter resistance from a Congress
representing diverse interests.

The Payne-Aldrich Tariff of 1908 repealed all of the reciprocity
agreements made by the Kasson commission. It did, however, mark a slight
shift in bargaining objectives from special concessions to equality of
treatment. The act set minimum rates and provided for penalty rates in
cases of undue discrimination.

The reciprocity movement revived during the administration of William
Howard Taft because of various political and economic factors. Taft, under
considerable pressure to revise the tariff, believed that some limited
reciprocity was needed to save the protective system. Canada seemed to
offer several advantages for such a move, and a reciprocity treaty was
negotiated in 1911. Newspapers rushed to support the treaty because of the
provision for free admission of paper and wood pulp. The U.S. Congress
approved the treaty, but it was rejected by the Canadian Parliament.

The Democratic-sponsored Underwood-Simmons Act of 1913 provided for a
significant lowering of the tariff and the elimination of penalty
bargaining. One section authorized trade agreements containing reciprocal
concessions, but none were negotiated. The act also contained a peculiar
reversion to the 1790s: lower duties for goods imported in American ships,
unless existing treaties prohibited the discrimination. World War I soon
obliterated all questions of reciprocity and bargaining, and the
negotiating potential of the act was never tested. Protectionist pressures
mounted after the war, leading to the Emergency Tariff Act of 1921.

Reciprocity as part of a concept of world order was a limited and
inconsistent part of the open-door concept that reached maturity in the
1890s. Equality of opportunity and nondiscrimination tended to be applied
to competition with other industrial powers in Asia and Africa, areas
where American power was limited. In its new colonial empire the United
States enforced a discriminatory commercial system and, despite the
open-door rhetoric, the government made some efforts to achieve a
privileged position in various Latin American countries. The effects were
limited to the Caribbean and Central America. The administration of
Woodrow Wilson tried to expand the Monroe Doctrine to include the
restriction of European economic activity in these areas.

American officials also used the arguments of equality of opportunity and
nondiscrimination to justify the "right" of Americans to
invest in underdeveloped countries and have access to their raw materials.
In some cases they defended this position by citing reciprocity. When the
Mexican government attempted some regulation of foreign oil companies
after the adoption of the constitution of 1917, State Department officials
argued that such action violated the principle of reciprocity, since
Mexican capital in the United States was not subject to discriminatory
treatment. For Mexico and other underdeveloped countries, this was a
hypothetical argument, since there was little if any Mexican capital
invested in the United States.

Revolutionary nationalism, with its concomitant policy of control or
elimination of foreign investments and properties, first emerged during
this period. The United States and other industrial-creditor nations
attempted to meet the challenge with a special definition of openness that
implied a limitation on the sovereignty of the expropriating or regulating
nations. How far would the United States go, and what means would it use,
to enforce the open door? This question dogged American policymakers
throughout the twentieth century. The results were mixed, and even
ambivalent, as a result of changing circumstances and interpretations of
national interest.

Part of the ambiguity was caused by the revival of the noncoercive, open
world view. The peace movement prior to 1914 sought some type of world
order beyond the open door. And, paradoxically, Woodrow Wilson in his
Fourteen Points described a partial vision of an open world with the
"removal, so far as possible, of all economic barriers, and the
establishment of an equality of trade conditions among all the nations
consenting to the peace and associating themselves for its
maintenance." To some Americans, the League of Nations seemed to
promise the establishment of an open world order. Although a mixed
opposition prevented United States entry, various Americans continued to
try to implement peace and reciprocity by other means.